World Bank: Private sector could increase growth by 7% in Palestinian territory

Sept. 12, 2017 9:22 P.M. (Updated: Sept. 13, 2017 10:29 P.M.)

(AFP/Abbas Momani/File)

BETHLEHEM (Ma’an) -- The World Bank released a report on Tuesday highlighting a “new vision” for the Palestinian economy based on the expansion of the private sector that could increase growth in the occupied Palestinian territory by seven percent each year.

While the report acknowledged the importance a political settlement for the decades-long conflict would have on the territory, “measures over the medium term can create new areas of economic activity, attract private investment, generate jobs and significantly improve living standards.”

According to the World Bank, investing in the private sector in the Palestinian territory could drive an annual growth rate of six percent in the West Bank -- which could create 50,000 jobs -- and eight percent in the besieged Gaza Strip -- producing 60,000 new jobs.

The World Bank’s report used a ten-year economic model to determine the impact investment in the private sector would have on the Palestinian economy.

Some of the reforms proposed by the World Bank that would benefit the growth of the Palestinian economy included facilitating trade and transactions for Palestinian firms at Israeli-controlled crossings, reviewing policies relating to dual use items (material that could be used for civilian and military uses) in order to lessen the process of obtaining special licensing for certain items, remove Israeli restrictions on Palestinian development in Area C -- the more than 60 percent of the West Bank under full Israeli control, and lifting the decade-long Israeli blockade on the Gaza Strip.

According to the World Bank, implementing these reforms would increase the size of the Palestinian territory’s economy by 36 percent in the West Bank and 40 percent in Gaza by 2025.

The report also suggested several reforms to internal Palestinian policies, including reforming regulations and licensing in order to lower the cost of business initiatives, the development of vocational trainings, facilitating land registration, strengthening governance, and implementing fiscal reforms.

The World Bank noted that if these internal reforms were implemented, the West Bank could see a growth of 24 percent in the West Bank and 30 percent in the Gaza Strip by 2025.

“Increased investment and more jobs would lead to improved living standards. Without a real change in policies, the report predicts an annual growth of just 2-3 percent on average, less than the pace of the population growth, Marina Wes, World Bank Country Director for West Bank and Gaza, said in a statement.

However, she continued, “bold efforts could attract investment, create jobs, and reverse the declining trend and reshape the economy.”

Wes noted that following these reforms could prove “promising in the medium term.” However, she warned that if Israeli and Palestinian authorities failed to implement reforms the “worsening jobs crisis will exacerbate the already high youth unemployment rate of 42 percent.”

“Inaction would lead to almost half of the Gazan labor force out of work by 2025. An unemployed population is a recipe for discontent, frustration and worse. This is in no one's interest,” she added.

Reports over the years have often pointed out the devastating economic impacts of Israel’s half-century occupation on the Palestinian territory, including the brutal siege on Gaza, Israel’s restrictions on Palestinian development in the majority of lands in the West Bank, and Israel’s control of the borders.